In the usa, cultivation licenses are often considered the most valuable in the highly competitive application processes that most states use to figure out who is allowed to cultivate and dispense in their states. This value is partly derived from the fact many populous states initially only grant a small number of cultivation licenses. As an example, Pennsylvania, with nearly 13 million people, only granted 13 licenses; Florida, having a population over 20 million, granted 7; while Ohio, with over 11 million people, granted 12; and New York City, with a population of nearly 20 million people, granted only 5 before recently expanding to 10. For context, Colorado has roughly 1,400 licensed cultivators for a population of just 5.5 million people. Competition for these limited permits is fierce, and those companies fortunate enough to win one see sky-high values attached to these licenses before they become operational. In Florida, a coveted cultivation/dispensary license sold for $40 million ahead of the company had seen a dime in revenue. Similarly, a pre-revenue New York license sold for $26 million.
Indeed, in states with Source cannabiscultivationconsulting.com, those businesses that hold them can easily see large returns on the investments within the near term. With artificially limited competition due to restricted license classes, cultivators in many states can control pricing and then sell their product in large volume. Most of these cultivators grow their product in state-of-the-art indoor warehouses with clean-room environments that resemble pharmaceutical production facilities a lot more than traditional commercial agriculture.
The existing green rush has taken by using it an intense give attention to large-scale cannabis cultivation. Across america and round the globe, we routinely hear stories of companies building larger and larger cannabis farms. In Arizona, Colorado, California, and Oregon, cannabis will be cultivated in greenhouses greater than 250,000 sq. ft. that are capable of yielding a lot more than 50,000 pounds of flower. While large-scale Canadian producers are building greenhouses inside the an incredible number of sq ft and building similar-sized facilities in Europe, Australia, and elsewhere.
But is that this trend sustainable? Or are these firms setting themselves up for long-term failure? As i have said in my previous column Are Canada’s Cannabis Companies Overextended?, were already visiting a trend towards large-scale greenhouse and outdoor production, which is driving prices down in states which do not have strict limits on the number of licenses they grant. As an example, the normal wholesale price of cannabis in Colorado has dropped from nearly $3,500 per pound at the beginning of legalization in 2013 to roughly $1,012 a pound on April 1, based on the Colorado Department of Revenue. In Oregon, in which the state ramped up licensing after early product shortages, wholesale marijuana trim (after harvest, the cannabis is trimmed of the leaves; those leftover leaves are called the trim and can be used to produce cannabis products) is currently selling for as low as $50 per pound, that is reportedly driving some cultivators in the state away from business.
This trend will only continue when the federal government`s 80-year test out cannabis prohibition finally concerns a conclusion. Today the cannabis industry is defined by individual state markets, where no product can cross state lines due to laws prohibiting interstate commerce of a federally illegal product. But when prohibition eventually ends, then interstate commerce will open and businesses will be able to import their cannabis from the state in the nation. When this happens, we could expect aprknj large-scale outdoor and greenhouse production will dominate the current market as cannabis commodifies. Many of the same environmental issues that make northern California perfect for producing grapes for wine will even allow it to be perfect for large-scale commercial cannabis production. The biggest greenhouse complex in the country, estimated at approximately 300 acres (approximately 13 million sq. ft.) of greenhouse space, is located in Wilcox, Ariz., as the desert conditions ensure it is ideal to control humidity in a greenhouse setting, a thing that adds a massive additional cost to greenhouse operators on the East Coast. These same conditions will apply to cannabis.